Source: Yiwu sourcing agent Author: YOYO Date: 2011-10-19
Yesterday, the central parity of RMB against the U.S. dollar is 6.3749, compared to a week earlier 6.3483, it depreciated 266 basis points. However, this exchange rate volatility does not relieve people concerns of the RMB appreciation. A week ago passed by the U.S. Senate the RMB exchange rate bill like the hanging "sword of Damocles", likely to breakdown many Yiwu foreign trade enterprises’ bottom line. Some foreign companies worry that in the already small profit margins trading environment, if increase the price, we will lose orders.
Businesses reflect: Profit margins have been drastically reduced
"Exchange rate volatility is the most concerned problem to export-oriented enterprises." Liu is a person in charge of processing trade enterprises, factory manufactured clothing and accessories are mainly exported to the United States. She introduced that the appreciation of the RMB against the U.S. dollar for every 1%, corporate profits will shrink 2% to 3%. This year, the RMB against the U.S. dollar rate has reached 3.7%, corporate profits have dropped more than 6%. Ms Lau also said that 6% loss of profits to those subcontract model business means you must strive to cost control and order types choose.
It is reported that from about the second half of last year, "afraid of receiving orders" phenomenon appear in part of Yiwu foreign trade enterprises. Christmas supplier Mr Huang introduced that as the yuan appreciate too powerful, customers lower price heavily, and taking into account of production costs, low profits and other factors, companies tend to give up some big orders.
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